U.S. Feedlots Add More Cattle Than Forecast as Grain Costs Drop

The total feedlot herd on Oct. 1 was 10.144 million head, down 7.7 percent from 10.989 million a year earlier.

Oct. 31 (Bloomberg) -- U.S. feedlot owners increased the number of cattle added to herds in September by more than twice the amount analysts forecast, a government report said, as lower grain costs signaled improved profitability.

Placements into herds totaled 2.025 million head, up 1 percent from 2.004 million in September 2012, the U.S. Department of Agriculture said today in a report. Analysts expected a 0.4 percent increase, according to 10 estimates compiled by Bloomberg. Through yesterday, the price of corn, the main livestock-feed ingredient, declined 42 percent in the past 12 months.

"Some folks have been able to take advantage of cheaper grains," Elaine Johnson, an analyst at Cattlehedging.com in Westminster, Colorado, said in an interview before the report. "Profitability improvements have encouraged higher placements. People are looking to put some cattle in."

The total feedlot herd on Oct. 1 was 10.144 million head, down 7.7 percent from 10.989 million a year earlier, the USDA said. Analysts in the Bloomberg survey expected a 7.5 percent drop.

Sales of cattle to slaughterhouses last month totaled 1.695 million head, compared with 1.598 million a year earlier, according to USDA. Analysts expected marketings of 1.66 million.

Feedlot operators typically buy 1-year-old cattle that weight 500 pounds (227 kilograms) to 800 pounds, called feeders, which are fattened on corn until they weigh about 1,300 pounds and are sold to meatpackers.

--Editors: Steve Stroth, Brendan Murray

To contact the reporter on this story: Elizabeth Campbell in Chicago at ecampbell14@bloomberg.net

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net